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Everest Events
Benchmarking Aircraft Asset Management
London
Tuesday, October 18, 2005
Objectives of Aircraft Asset Management Overview of Aircraft Asset Management Industry ExperienceTop 5 Major Leasing CompaniesMarket Churn & TrendsManaging the lease term
Asset Risk ManagementScope of Presentation
The Asset Management Objectives:– Maintain the rental stream for the term of the lease agreement– Maintain the value of the asset and wherever possible effect an
appreciation in value– Effect smooth transition from lease to lease– Minimise Asset Management cost burden– Minimise ‘off-lease’ time– Minimise refurbishment costs– Develop a good working relationship with Lessee
Through:– A structured, professional and efficient monitoring programme,
establishing a technical rapport with lessee– Risk driven and measured activity– To identify compliance with terms / covenants and lessee plans for
assets– Establish recommended actions and progress these
Asset Management
Aircraft are complex mobile assets that are highly susceptible to a range of factors which can significantly influence their values.The degree of influence is greater for maturing assets than for new assets.The $ value of the influence is greater in new assets than in mature assets.There are no sovereign risk lessees.All assets need management
Asset Management
Asset Management
COMMERCIAL TECHNICAL FINANCIAL LEGAL POLITICAL
OPERATING LEASE RISK
Asset ManagementAsset ManagementCommercial – Assess, monitor and advise the commercial well being of the lessee and the aircraft lease within the prevailingmarket and plan remarketing, renewals, sales and exits. Default resolution. Portfolio planning. Technical – Determine & manage any changes to specification, value, utility or marketability. Default resolution (operational).Financial – Manage the collection of income streams while maximising shareholder / bond holder value, minimising taxation burden. Management of cashflows, debt servicing, exchange rate hedging.Political – Assess, monitors and advises on current and developing changes in political environment for the operatorLegal - Assess, monitors and advises on current and developing legislative regulations impacting on the operator, the lease agreement and the lessor. Insurances, Default resolution, documentation.
Technical Asset Management Technical InspectionsUnderstand the Role Required
Lessee
Lessor’s Inspector
Asset Management
COMMERCIAL TECHNICAL FINANCIAL LEGAL POLITICAL
OPERATING LEASE RISK
Austen HallPeter MoylanPaul Rofe
Angus MackayColin Short
Mike SkinnerAngus Williamson
Terry McGaughan & Hanspeter Baserga
Even The Profitable And Good -Have Risks to Manage
There is only so much an airline can do to try and get cheap fuel
Where Does Our Asset Management Where Does Our Asset Management Sit In The Industry CycleSit In The Industry Cycle
Recovery TimescalesRecovery Timescales………………..
Aviation Economic Recovery In 2005 ?Recovery Dependent on:Recovery Dependent on:
Oil Prices ($69.91 / Oil Prices ($69.91 / Barrel 31Barrel 31stst August)August)Passenger loads being Passenger loads being maintainedmaintainedYields on airfares Yields on airfares increasingincreasingReduction in oil and Reduction in oil and fuel prices Increases fuel prices Increases in USA & European in USA & European GDPGDPIncreases in Increases in disposable incomedisposable incomeIncreases in consumer Increases in consumer confidenceconfidence
Industry Bad Signs Are They Here Industry Bad Signs Are They Here Again?Again?
Biggest Backlogs
8% 6%
4%
4%
3%
3%
2%
2%
2%
2%
64%
ILFC
J e t B l ue A i r wa y s
Ry a na i r
Ge ne r a l El e c t r i c Ca pi t a lGr oupUS A i r wa y s
AN A - A l l N i ppon Ai r wa y s
J a pa n A i r l i ne sCor por a t i onS out hwe st Ai r l i ne s
Ai r C a na da
Emi r a t e s A i r l i ne s
Ot he r s
Lessor Backlogs
52 %
2 6 %
6 %
5%4 %
3 % 2 % 2 %
I LFC
Ge ne r a l El e c t r i cCa pi t a l Gr oup
CI T Le a si ng Cor p
S i nga por e Ai r c r a f tLe a si ng Ent e r pr i se
De bi s A i r F i na nc e BV
The Fl ugl e i di rI c e l a nda i r Gr oup
Fi nna i r A i r c r a f tFi na nc e Lt d
A v i a t i on C a pi t a l Gr oup
Lessor Backlog
97.28570TOTAL
1.8811Aviation Capital Group
2.0512Finnair Aircraft Finance Ltd
2.5615The Flugleidir Icelandair Group
4.124Debis / AerCap BV
4.7828Singapore Aircraft Leasing Enterprise
5.9735CIT Leasing Corp
25.09147General Electric Capital Group
50.85298ILFC
% ShareTotal
AircraftBacklog -Operating Lease Companies
Biggest Backlogs
36.241305TOTAL
1.8366Emirates Airlines
1.8366Air Canada
2.0674Southwest Airlines
2.0875Japan Airlines Corporation
3.11112ANA - All Nippon Airways
3.22116US Airways
4.08147General Electric Capital Group
4.11148Ryanair
5.64203JetBlue Airways
8.28298ILFC
% ShareTotal AircraftBacklog -Top 10 Owners
Industry Participants
Lombard
Tombo
Sale
ALMOrix
FocusPegasusOasis
AMSGECASDebis / AerCapSaab
AirclaimsILFCBouliounAirbus
BACKCITBabcock & BrownBAE
IBAGATXAWASRolls Royce / Pembroke
SH&ESigmaAviation Capital Group
Boeing
Independent Supporter
Independent Lessor
Independent Servicer
Manufacturer
Industry Cycle – Polarisation Legacy Carriers vs Low Cost carriersAsset Types – Short Haul Vs Longhaul
- Boeing Vs AirbusAircraft Vs EnginesNorth American Market IssuesGeographic Dispersement
Market Churn
Aircraft Vs EnginesGeographics– North American Market Issues– Europe– Middle East– Asia Pacific
Asset Types– Wide Body Vs Narrow body– Freighter Vs Passenger– Boeing Vs Airbus
Portfolio Diversification
Top Lessors 2003
29.9%11.375.4%734.8IEM Airfinance20
2.9%12.61.4%842.7Aviation Capital Group19
-6.3%13.00.6%884.3Saab Aircraft Leasing18
-19.1%13.5**n/a915.6Lombard Aviation Capital17
-20.7%12.8-20.7%949.5Airbus Asset Management16
-6.2%12.517.3%1,022.3Tombo Aviation15
6.8% 10.61.7%1,274.9BAE Systems Regional14
15.0%12.443.7%1,542.4ORIX Aviation Systems13
13.3%13.843.5%1,721.1Pembroke Group12
-10.2%13.2-15.4%1,752.5Pegasus Aviation11
-0.9%10.929.0%1,773.5Boullioun Aviation Services10
16.3%10.838.3%1,920.6SALE9
-4.7%12.35.9%2,531.2Babcock & Brown8
-1.0%13.09.6%2,697.6GATX Air7
-4.4%13.448.3%2,877.6CIT6
-6.9%12.2-3.1%3,220.6AWAS5
-5.7%10.75.6%3,267.5debis / AerCap4
-15.3%11.330.2%3,843.3Boeing Capital3
1.2%34.616.2%20,263.0ILFC2
-0.7%18.713.6%26,589.7 GECAS1
ChangeAverage aircraft value $ million
ChangeFleet value $ million
Leasing companyRank 2003
Lessor ConsolidationLessor ConsolidationWho Is Next?Who Is Next?
There Are Worse Jobs In There Are Worse Jobs In Aviation!!Aviation!!
International Aviation Services Group
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Tel: +44 (0) 1293 456105 / 6Fax: +44 (0) 1293 456107Email: info@iasg.co.uk
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